Cross-Border Patent Infringement Involving Japan: Jurisdiction, Governing Law, and Enforcing Foreign IP Rights

In today's interconnected global economy, intellectual property disputes frequently transcend national borders. A company based in one country might find its foreign patent allegedly infringed by the activities of a Japanese corporation, either through actions within the foreign country itself or through activities in Japan that have cross-border effects, such as manufacturing for export or inducing infringement abroad. This raises a cascade of complex legal questions: Can the foreign patent holder sue the Japanese company in a Japanese court? If so, which country's laws will govern the patent's scope, the infringement claim, and the available remedies? And can the Japanese company challenge the validity of the foreign patent within the Japanese legal proceedings?

Can Japanese Courts Hear Cases Involving Foreign Patents? International Jurisdiction

The first hurdle in any cross-border IP dispute is establishing which country's courts have the authority—or international jurisdiction (kokusai saiban kankatsu)—to hear the case. Japan's Code of Civil Procedure, significantly revised in 2011 to codify rules on international jurisdiction, provides the framework.

Generally, Japanese courts will have jurisdiction over a defendant if, for example, the defendant (such as a Japanese corporation) has its principal place of business or head office in Japan (Article 3-3, Code of Civil Procedure). Even if jurisdiction is formally established, Japanese courts retain the discretion to dismiss a case under "special circumstances" if hearing it in Japan would severely impair fairness between the parties or impede the proper and prompt administration of justice (Article 3-9).

A specific rule applies to the existence or validity of intellectual property rights that are established by registration, such as patents. Japanese courts have exclusive jurisdiction over disputes concerning the validity of Japanese-registered IP rights (Article 3-5(iii)). By implication, Japanese courts generally do not have jurisdiction to issue judgments that would invalidate a foreign-registered patent with effect in that foreign country (erga omnes effect).

However, patent infringement lawsuits, even those concerning foreign patents where the patent's validity might be challenged as a defense, are typically handled under general jurisdictional rules. The mere fact that a foreign patent's validity might be questioned as part of a defense does not automatically strip a Japanese court of jurisdiction over the infringement claim itself, provided other grounds for jurisdiction (like the defendant's domicile in Japan) exist.

Thus, if a foreign entity holds a patent granted by "Country A" and believes a Japanese company (with its main office in Japan) is infringing that Country A patent through its activities, a lawsuit brought in Japan against the Japanese company would likely be accepted by Japanese courts from a jurisdictional standpoint.

Which Law Applies? Navigating the Maze of Governing Law (Conflict of Laws)

Once jurisdiction is established, the next critical step is determining the applicable substantive law (junkyo hō), a question addressed by conflict of laws principles (in Japan, primarily by the Act on General Rules for Application of Laws, or Hō Tekiyō Tsūsokuhō).

1. Determining Infringement: The Existence and Scope of the Foreign Patent Right
A core principle in patent law is territoriality (zokuchi shugi): a patent granted by a specific country (e.g., Country A) is generally effective only within the territory of that country. This was affirmed by the Supreme Court of Japan in the BBS Wheels case (Judgment of July 1, 1997).

But which law governs the existence, scope, and infringement of that Country A patent when a Japanese court is hearing the case?

• Registration Country Law Theory (tōrokukoku hō setsu): One approach, adopted by the Supreme Court of Japan in a case concerning the effect of a patent right (Judgment of September 26, 2002, Method for Manufacturing Semiconductor Device Case), is that the law of the country where the patent was registered and granted determines these issues.
• Protecting Country Law Theory / Law of the Place of Protection (Hogo Koku Hō Setsu): A widely supported academic view, and one often favored for its practical outcomes, is that the law of the country for whose territory protection is being claimed should apply. This typically means the law of the country where the alleged infringing acts occur and where the patentee's exclusive rights are impacted.

If a Japanese company is accused of importing and selling products in Country A that infringe a Country A patent, then Country A is the protecting country, and Country A's patent law would determine whether the patent is valid there and whether those acts constitute infringement under that patent.

The situation becomes more complex if the acts occur in Japan but allegedly cause infringement in Country A (e.g., manufacturing in Japan for export to Country A, or acts in Japan that induce infringement in Country A). If Country A's patent law has provisions for extraterritorial acts like inducement (as is sometimes the case), a Japanese court applying Country A law (as the protecting country law) might find that such acts based in Japan infringe the Country A patent.

2. Governing Law for Remedies (Injunctions, Damages)
Once infringement under the applicable patent law is established, which law governs the available remedies?

• Injunctions and Disposal of Infringing Goods:
  • The Supreme Court (in its 2002 decision) tied this to the law governing the patent's effect (i.e., registration country law).
  • However, much legal commentary argues that remedies like injunctions should, for consistency, be governed by the same law that governs tort claims for damages (see below), often the law of the place where the tort occurred (lex loci delicti).
• Damages: Claims for damages due to patent infringement are generally treated as tort claims.
  • Under Japan's Act on General Rules for Application of Laws, Article 17 generally points to the law of the place where the results of the wrongful act occurred. If this place was unforeseeable, the law of the place where the wrongful act was committed applies. Article 20 allows for the application of the law of another country if it has a manifestly closer connection to the tort.
  • The Article 22 "Public Policy / Japanese Law Filter": A crucial provision, Article 22, states that even if foreign law is found to be applicable to a tort, the establishment of a claim under that foreign law and its effects are also subject to considerations of Japanese public policy and fundamental principles. Specifically, a claim based on foreign law will only be recognized if the facts constituting the tort would also constitute a tort under Japanese law (though not necessarily the same specific type of tort). Furthermore, any remedies granted cannot exceed what would be available under Japanese law for a similar situation.
    • This "filter" has historically posed challenges for enforcing foreign patent rights in Japanese courts. Some older lower court decisions interpreted it to mean that because Japanese patent law is territorial, the infringement of a foreign patent could not, by itself, be recognized as a tortious act under Japanese law for the purposes of Article 22, thereby barring damage claims even for acts occurring within the foreign patent's territory.
    • However, more modern legal thought suggests that this interpretation of Article 22 is too restrictive, especially for acts occurring within the foreign patent's territory. If an act is a clear infringement of a valid patent under the laws of Country A and causes harm there, the type of wrong (violation of an exclusive right) is something Japanese tort law recognizes in principle. The territoriality of the Japanese patent shouldn't automatically negate the recognition of a wrong committed under Country A's patent law within Country A.
    • For acts like inducement originating from Japan that cause infringement of a foreign patent in that foreign country, the Supreme Court (in its 2002 decision) suggested that if Japanese law itself doesn't provide for liability for inducing infringement of Japanese patents abroad, it would be difficult to find that inducing infringement of foreign patents from Japan is actionable under the Japanese law "filter" of Article 22, absent specific legislation or treaties.

Whose Invention Is It Anyway? Employee Inventions in a Cross-Border Context

Disputes can also arise over who rightfully owns the patent. Consider if the foreign patent holder ("Inventor X") previously worked for the Japanese company ("Company Y") and allegedly created the invention in Japan during that employment. Company Y might claim that it, not Inventor X, was entitled to the patent in Country A.

Determining ownership of the "right to obtain a patent" for an employee invention in a cross-border scenario involves another layer of conflict of laws:

• The Supreme Court of Japan, in the Olympus Case (Judgment of October 17, 2006), addressed remuneration for foreign patents arising from employee inventions. It held that contractual aspects (like assignment and remuneration) are governed by the law applicable to the employment contract. However, it also stated that the effect and validity of the right to obtain a patent itself in a specific country is governed by the law of that country (due to patent independence under the Paris Convention). The Court did not definitively rule on which law governs the initial determination of whether an invention is a "service invention" and who (employee or employer) is first entitled to seek foreign patents.
• Prevailing academic views often favor applying a single law to determine initial entitlement for pragmatic reasons, frequently pointing to the law of the place where the inventive work was principally performed (e.g., Japan, if the research and development occurred there during employment with a Japanese company). There's also an argument that Japanese employee invention rules (Patent Act Article 35) could apply as mandatory rules if the employment and invention creation are centered in Japan.

If, under the properly chosen law (likely Japanese law if the employment and inventive activity were in Japan), Company Y was entitled to the invention, it could argue that Inventor X's patent in Country A was improperly obtained.

Challenging the Foreign Patent in Japan: The Defense of Invalidity

If Company Y is sued in Japan for infringing Inventor X's Country A patent, can Company Y defend itself by arguing that the Country A patent is actually invalid under Country A's own patent laws (e.g., due to lack of novelty, obviousness, or improper inventorship)?

This is a complex issue, as it involves a Japanese court potentially making a determination about the validity of an IP right granted by a foreign sovereign.

• One restrictive view is that Japanese courts should not adjudicate the validity of foreign patents, even as a defense, treating them as presumptively valid.
• However, a more accepted view, reflected in some Japanese court practice (e.g., Tokyo District Court, October 16, 2003), is that a Japanese court can consider the invalidity of a foreign patent as a preliminary question or a defense (inter partes), because such a finding does not invalidate the patent erga omnes in its country of origin but only affects the enforceability between the litigating parties in the Japanese proceedings. This approach aligns with fairness, especially since Japanese Patent Act Article 104-3 allows invalidity defenses for domestic Japanese patents in infringement suits.
• An intermediate approach might involve the Japanese court staying its proceedings if a formal invalidity action is concurrently pending in the patent-granting country.

Conclusion: Navigating the Complexities of International Patent Litigation

Cross-border patent disputes involving Japan present a formidable array of legal challenges. Establishing jurisdiction in a Japanese court is often feasible if the defendant has a significant presence in Japan. However, the subsequent determination of the governing substantive law for both the infringement itself (often looking to the law of the country where patent protection is sought or infringement occurs) and the available remedies (subject to Japanese public policy and procedural rules) requires intricate legal analysis. Furthermore, underlying issues like the ownership of employee inventions can introduce their own conflict of laws dimensions. While challenging the validity of a foreign patent as a defense in Japanese infringement proceedings is a developing area, it represents a critical strategic consideration for defendants. Given these complexities, businesses involved in or contemplating cross-border patent litigation with a Japanese nexus should invariably seek specialized legal counsel with expertise in Japanese international intellectual property law and dispute resolution.